Boost for low-paid workers as minimum wage set to rise by 6% in Wednesday's Budget
29 October 2024, 14:17 | Updated: 29 October 2024, 14:25
Rachel Reeves will raise the minimum wage by 6 per cent in Wednesday’s Budget in a move which will provide more than a million workers a pay rise.
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The above-inflation increase will benefit young people the most with the government set to ensure 18 to 20-year-olds are paid the same rate as older workers - closing the current gap.
The minimum wage, or national living wage for over-21s, will rise from £11.44 to between £12.12 and £12.20 from next year, according to The Times.
The Low Pay Commission, which advises the government on the national living wage, said in September it expected the level to rise to £12.10, but stronger earnings growth has fuelled a larger rise.
The government’s current target is for the national living wage to be two thirds of the hourly median income, but ministers have suggested they want to exceed this.
Resolution Foundation principle economist Nye Cominetti said: “Millions of low earners are set for good news in the budget when the chancellor announces the latest rise in the minimum wage.”
He said businesses should be used to above-inflation increases to the national living wage and that the plans were actually “less ambitious than the previous government’s record”.
But given expected increases to employer’s national insurance, he said: “Some businesses will legitimately say that their wage costs have gone up quite a bit as a result of this Budget."
Read more: 2024 budget: What we know and what to expect
The separate Real Living Wage, which takes into account “actual living costs”, rose last week to £12.60 for the next year, rising to £13.85 for London-based workers.
However, the Real Living Wage is voluntary, with only around half a million people currently receiving the wage.
The national living wage was increased by Jeremy Hunt last November to £11.44 an hour, which benefited nearly three million workers.
A Treasury spokesman said: “We do not comment on speculation around spending decisions or tax changes outside of fiscal events.”
Prime Minister Sir Keir Starmer said in a speech on Monday the Budget will shed a "harsh light" on the state of the British economy as he confirmed tax increases will take place.
He said Ms Reeves will also announce a £240m investment for public services, adding that the £2 cap on bus fares will end and a new £3 limit will be introduced.
